45,000 farmers to get EABL deals in Sh15bn investment

[COLLOH-MZII RELOADED]

Beer maker East African Breweries Limited (EABL)’s EABL • 256 ▼ 1.16% planned Sh15 billion factory in Kisumu will see up to 45,000 farmers contracted to supply sorghum which the firm uses to produce Senator keg, a low-cost beer.
EABL has contracted 30,000 farmers in Siaya, Migori, Kisumu, Homa Bay, Kitui, Makueni and Tharaka Nithi to meet the 20,000 metric tonnes annual demand of the cereal.
President Uhuru Kenyatta on Wednesday said the multi-billion shilling commitment by EABL is projected to grow demand for sorghum to 40,000 metric tonnes in the next five years.
“As a result, gross additional farmer earnings are expected to reach over Sh6 billion annually over the next decade,” he said during an address at State House.
Construction of the new brewery is set for launch on July 16 with operations expected to start within 18 to 24 months.
It will sit on land previously occupied by a Kisumu brewery which commenced operations in 1984, but was shut down in 2002.
The parcel of land leased to the Kenya Breweries Limited (KBL) has remained idle and has been at the centre of a tussle with the county government.
The county says it should be repossessed and allocated to new investors. Re-opening of the facility is set to lead to fresh demand for Senator, a beer launched in 2004 and targeted at the low-end of the market.
Diageo Global chief executive Ivan Menezes, who was present during the announcement, said the investment underlines the company’s long-standing commitment to Kenya.
READ: Diageo to buy Clooney's tequila brand for Sh100 billion
“This announcement now brings our incremental capital investment to Sh30 billion over the past five years and further deepens our relationship with Kenya, which has now spanned 95 years,” he said.
The factory will potentially create 110,000 jobs, which include direct employment for suppliers and plant workers as well as their families.
In January, the EABL signalled intentions to continue with the sale of prime assets with an invitation of bids for a disused brewery and a prime piece of land in Mombasa.
READ: EABL to set up Sh15 billion brewery in Kisumu
The property, which sits on a six-acre piece of land in Mombasa’s Shimanzi Industrial Area, was put on sale for a price of Sh700 million.
The sale of the property was part of plans to exit a leasehold agreement the brewer has had with the Kenya Railways Corporation (KRC) for more than 60 years.
The beer maker last July sold its Ruaraka-based headquarters to Tembo Sacco, a 2,400-member savings and credit co-operative society made up of current and former staff, for Sh675m.
The building has since been leased back to EABL, which continues to use it as its headquarters.

 

[Geza Ulole]

Diageo acquiring of Serengeti Breweries was a biggest mistake. Heads need to roll at Fair competition commision for allowing that bogus acquisition.

 

[Geza Ulole]

Diageo plc acquiring of Serengeti Breweries was the biggest mistake the Fair competition Authority should have seen on its consception. The next move is EABL excerting influence for a closure of Serengeti Breweries plant in Mwanza.

 

[COLLOH-MZII RELOADED]

Diageo acquiring of Serengeti Breweries was a biggest mistake. Heads need to roll at Fair competition for allowing that acquisition.

How was it a mistake

 

[Geza Ulole]

How was it a mistake

The company was on the rise while Serengeti beer was doing good in the market but since Diageo acquired serengetibrew we see sabotage and efforts to push Tusker (a less liked beer compared to serengeti beer) in Tanzanian market. Diageo had a plant before in Kisumu and could not compete with Mwanza! This is a second attempt

Tanzania puts EABL on notice over Serengeti Breweries deal By Moses Michira | Updated Thu, July 2nd 2015 at 00:00 GMT +3 SHARE THIS ARTICLE Share on Facebook Share on Twitter NAIROBI:

Beer maker East African Breweries Ltd (EABL) could be forced to cut its stake in Serengeti Breweries, leading to what could be a second-time unlucky run in Tanzania.

The Fair Competition Commission (FCC) of Tanzania has told EABL that it was cancelling an earlier approval to acquire a controlling stake in Serengeti, where it owns 51 per cent. Four years ago, a disagreement pushed EABL to buy back a 20 per cent stake of its biggest subsidiary, Kenya Breweries Ltd, then owned by Tanzania Breweries Ltd.

"The commission has issued a notice of an intention to revoke its own decision with respect to the merger. It was observed that, based on the rationale of the approval, the performance of Serengeti Breweries Ltd was not as per expectations of the commission," reads a statement issued by the commission.

The agency, equivalent of the Competition Authority of Kenya, accuses EABL of contravening the terms of the approval that was granted in 2010. Among the conditions set in the approval was that the acquisition would help Serengeti move its brands faster and gain market share – a reality that may not have been achieved.

East African Breweries acquired the stake in Serengeti after selling a stake it held in Tanzania Breweries, which is owned by its global rival and beverage manufacturer SABMiller. But it is SABMiller that has gained from the termination of the agreement between the two brewers, with analysts pointing out that Serengeti's market share has actually suffered.

FORMAL HEARING

The regional brewer has confirmed receiving FCC's notice in April, and went ahead to respond to the questions raised by the Tanzanian authority. The Group Corporate Relations Director Julie Adell-Owino said the firm was hopeful that the notice would be withdrawn after an upcoming formal hearing.

"EABL wishes to inform the public, its shareholders, customers and all other stakeholders of SBL, that EABL vigorously disputes the intended revocation and awaits a date for the formal hearing with the FCC," she said.

It is unclear what options would be available to EABL should the outcome of the hearing be unfavourable. But the latest turn of events came even after EABL said it had 'provided the FCC with a full response to the statements made in the notice', implying that there might not be much left to discuss.

Meanwhile, EABL has announced the resignation of Andy Fennell as a director of the company, to be replaced with John O'Keeffe. It also appointed Jane Karuku as the new managing director of KBL to replace Joe Muganda who resigned to take up a similar position at the Nation Media Group.
Read more at: Tanzania puts EABL on notice over Serengeti Breweries deal